Australia's Westpac Bank interim net profit up 6%

Australian banking heavyweight Westpac left its dividend unchanged at 94 cents.
Australian banking heavyweight Westpac left its dividend unchanged at 94 cents. PHOTO: REUTERS

SYDNEY (AFP) - Australian banking heavyweight Westpac posted a six per cent rise in interim net profit to A$3.90 billion (S$4.05 billion) on Monday (May 8) on the back of a strong performance from institutional operations.

The lender's cash profit in the six months to March 31, the financial industry's preferred measure which strips out volatile items, came in 4 per cent higher at A$4.01 billion.

Westpac left its dividend unchanged at 94 cents.

The result capped six-monthly reporting by three of the nation's top lenders over the past week, with ANZ enjoying a 23 per cent spike in cash profit while NAB's cash earnings rose 2.3 per cent.

The Commonwealth Bank - Australia's biggest - uses a different reporting schedule and posted a record interim cash profit of A$4.91 billion in February.

Chief executive Brian Hartzer cited a 26 per cent fall in impairment charges as helping Westpac's earnings, with all divisions performing well.

"This is a solid result given the current complex operating environment," he said.

"Our portfolio of businesses has performed well. The institutional bank is the standout, benefiting from improved credit quality, increased customer transactions, and a strong result from our markets business.

"Our consumer and business banks continued to grow in targeted areas but margins were affected by higher funding costs." Cash earnings from institutional banking jumped 34 per cent while they were up 5 per cent from consumer banking and two per cent from business banking.

All of Australia's big banks are battling higher funding costs and lower interest margins, with rules now demanding they hold more reserves as a buffer against mortgages and fears over rising bad loans.